(Updates with afternoon trading)

* Trump mulls Kharg Island takeover, additional troop

deployment

* Main indexes on track for fourth straight weekly loss

* FedEx ( FDX ) up on strong forecast; Energy stocks gain

* S&P 500 -1.14%, Nasdaq -1.64%, Dow -0.68%

By Noel Randewich and Johann M Cherian

March 20 (Reuters) - Wall Street tumbled on Friday, with

losses in heavyweights Nvidia ( NVDA ) and Microsoft ( MSFT ), as the U.S.-Israeli

war with Iran entered its fourth week, deepening worries about

inflation and the potential for higher interest rates.

The conflict in the Middle East showed no signs of easing. The

U.S. military was deploying a large amphibious assault ship with

thousands of additional Marines and sailors to the Middle East,

while Iran's new supreme leader hailed Iran's "unity" and

"resistance."

"The market is finally settling into the idea that this may

go on longer than initially expected, and I think that's why

markets are selling off. This conflict may go on not for just a

few weeks, but maybe beyond several months," said Jake

Dollarhide, CEO of Longbow Asset Management in Tulsa, Oklahoma.

MAGNIFICENT SEVEN COMPANIES FALL

Wall Street's most valuable companies declined, with Nvidia ( NVDA )

, Alphabet, Tesla and Meta Platforms ( META )

each down about 2%. Microsoft ( MSFT ) dropped 1.5%.

U.S. Treasuries fell for a third session, in step with a broader

selloff in UK and European government bonds, as the Middle East

conflict kept oil prices elevated and reinforced inflation

worries.

U.S. rate futures show the Fed is more likely to raise

interest rates than cut them by the end of 2026, according to

CME's FedWatch tool.

"We just have a classic environment that is pushing rates

up and it's driven by higher inflation expectations, which

relate back to the oil price. And the fact that we're heading

into the fourth week of the war suggests that that stress is not

going away anytime soon," said Padhraic Garvey, head of global

rates and debt strategy at ING in New York.

The S&P 500 was down 1.14% at 6,530.91 points.

The Nasdaq declined 1.64% to 21,728.68 points, while the Dow

Jones Industrial Average was down 0.68% at 45,707.67 points.

Wall Street's fear gauge, the CBOE Volatility Index,

rose 2.4 points to 26.4.

Nine of the 11 S&P 500 sector indexes declined, led lower by

utilities, down 2.48%, followed by a 1.84% loss in

real estate.

ENERGY SECTOR RALLIES

The S&P 500 energy sector index rose 0.7%, putting

it on track for its 13th straight weekly gain. That

week-over-week rally would be its longest since at least the

late 1980s, according to LSEG data, as geopolitical events in

Venezuela and the Middle East dominated much of the first

quarter.

Friday marks the once-in-a-quarter simultaneous expiry of

derivatives contracts tied to stocks, index options and futures,

also known as "triple witching," which can boost trading volume

and aggravate volatility.

All three main indexes were heading for their fourth

straight week of losses and were below their 200-day moving

averages, underscoring the recent deterioration of sentiment on

Wall Street.

The Russell 2000 index of smaller companies slipped

1.6%, leaving it down almost 10% from its record high close on

January 22.

Super Micro Computer ( SMCI ) tumbled 30% after three people

associated with the artificial intelligence server maker were

charged with smuggling at least $2.5 billion of AI technology to

China. Rival Dell advanced 4.4%.

FedEx ( FDX ), often seen as a barometer of business activity,

issued upbeat forecasts and said global demand was holding

steady despite geopolitical tensions, sending its shares up 1%.

Declining stocks outnumbered rising ones within the S&P 500

by a 2.4-to-one ratio.

The S&P 500 posted 11 new highs and 26 new lows; the Nasdaq

recorded 32 new highs and 202 new lows.